Chorus lashes regulatory process

NEW Zealand's ultra-fast broadband initiative is threatened by a regulatory process that is "weird" to foreign investors, says Chorus chief executive Mark Ratcliffe.

Ratcliffe used a speech to a Commerce Commission conference on proposals to regulate prices for unbundled bitstream access to express deep frustration at a process he says should be halted and reviewed.

"To be honest, I'm not sure why we are here," he said, complaining that in the 17 months since Chorus was split from Telecom to become a regulated provider of backbone telecoms infrastructure he had "spent more time on regulation than any chief executive could possibly dream of."

The split was meant to simplify the regulatory tangle that used to surround Telecom, when it involved both regulated and unregulated activity under one roof.

"Domestic and international investors are baffled. Perversely, regulatory risks for our business have increased following the structural separation and government-sponsored industry change - the opposite of what was expected," he said.

One result of that was a sharp drop in international investor support for Chorus, from 55 per cent of the shareholder base last December, when the Commerce Commission released its draft decision on UBA, to 45 per cent currently.

"At the time of demerger, around 75 per cent of Chorus shares were held by international investors, so there has been a dramatic flight of international capital out of Chorus and New Zealand.

"If the incoherence in the framework is not reconciled, it will impact every New Zealander," he said. "International investors will simply walk away."

The commission's review stems from its legislative requirement to regulate prices to access existing copper-based telecoms networks under rules written to cope with an unseparated Telecom.

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